Financial Reform Begins at Home

Recent scandals have called our attention to an issue, financial reporting, that we all know, privately at least, is long overdue. The issue goes far beyond fraud, as more and more financial statements require correction. Indeed, many, if not all, financial operations within corporations and government both cost far too much and do not produce the desired result. Reforms led by Congress, Attorneys General, auditing and accounting groups, and others will, over time, change the financial landscape. But real financial reform begins at home. Corporations and government agencies have the opportunity to make changes that will simultaneously improve trustworthiness, profitability, and financial decisionmaking. Doing so will not be easy. In this paper we propose five tenets to guide an organization’s reform effort. These tenets call for a focus on customers, proper management accountability, measurement and continuous improvement, end-to-end management of financial processes, and leadership from the very top.